Liberty House’s Sanjeev Gupta may ‘Rescue’ Tata Steel’s UK Biz
Gupta, who has rescued several steel plants in the UK so far, is eager to take on the challenge of turning around co that has been suffering losses for almost a decade, but this comes with a cost caveat
Economics and management, Cambridge University
Founded trading company Liberty House in 1992
Complement trading business with acquired manufacturing base Mumbai: Sanjeev Gupta, the 44-year founder of Liberty House, has emerged as a white knight that could save Tata Steel’s UK business from an imminent shutdown and job losses. Gupta, who has rescued several steel plants and hundreds of jobs in the UK so far, is eager to take on the challenge of turning around a company that is running into losses for almost a decade. He has already begun discussions with the UK government to save the country’s largest steelmaker.
“This whole thing has come as a bit of a surprise to everybody. Nobody was expecting Tata to make a dramatic move. We haven’t done a proper analysis, but we are scrambling to do one as we speak,” Gupta told ET in exclusive interview. “We have started a dialogue with Tata, but they are trying to work out exactly what process to follow. All this will become clearer this week.”
Tata Steel decided to sell its poorlyperforming UK steel business last week, giving up its nine-year fight to salvage the operations of the business it bought as part of the takeover of Corus at the peak of the commodity price boom in 2007.
Gupta’s interest in Tata Steel, however, comes with a caveat. He is proposing a radical turnaround plan that could cost as much as £1 billion by shutting down the blast furnaces and instead produce steel from the scrap generated in domestic market.
“I am talking about a massive transformation. It will need a lot of investment, reorganisation of labour. It does not mean job losses, but retraining the staff. It is an upheaval that will require massive effort, and will be painful in the beginning but will lead to longterm sustainable model in the future,” said Gupta, who founded Liberty in his dorm room in Cambridge University in 1992.
Gupta, known as SKG in the industry, pointed out that UK steel plants import 100% of their raw material even when UK remains one of the largest exporters of scrap steel in the world. Tata Steel has two loss-making steel plants in the UK that employ about 15,000 people.
Gupta’s Liberty House has traded various commodities in the markets of Asia, Middle East, Europe and Africa. From 2000 onwards, his focus has been on growing the trade in steel, metals and raw materials while developing the industrial asset base of the group. Continuous investments in manufacturing assets is to complement the growth in its trading business. It operates from London, Dubai, Singapore and Hong Kong with a network of offices spread across 30 countries around the world. Its annual turnover is approaching $5 billion with total steel production capacity of more than 3 mil- lion tonne per annum.
Gupta said Liberty House, Tata Steel and the UK government have the resources to turnaround the ailing business. “This needs very big investment, more than what the UK has had for a generation. We need to work this out with Tata and the government on how we are going to organize it,” he explained.
He said there are massive pension, environmental and staff liabilities to be tackled as art of the whole gambit. He is also in talks with the government to solve the problem of high energy bills in the UK.
Gupta, however, isn’t too worried about resistance from unions against his plan to shut down the steelmaking blast furnaces, and said he would rather wait until all the stakeholders buyin to his idea of recycling scrap steel.
“I have had positive interactions with unions till date. They have been very supportive, partly because things have become so difficult. I am not expecting any resistance and problem. On the contrary, I am expecting them to be on my side,” Gupta said.
Liberty House bought ailing steel company Caparo from Swaraj Paul last year, and two Lanarkshire steel mills from Tata Steel last month in a deal brokered by the Scottish government. The trading company also restarted a steel plant in Newport, giving some hope in an industry seeing a spate of job losses. Gupta was born in Ludhiana in 1971. He moved to the UK to study in his early teens. His father PK Gupta, who was then a bicycle manufacturer and exporter, moved to Nigeria to establish a business empire named African Industries.
Profile: Age: Education: